Seven-Up Bottling Company has received an offer from its majority shareholder, Affelka, to buy out minority stakeholders for ₦19.33 billion ($60 million), in a takeover deal aimed at restructuring the struggling company.
Privately-held Affelka, the investment firm of the Lebanese El-Khalil family, has offered to acquire 171.5 million shares from minority shareholders at ₦112.70 per share, an 18 per cent premium to Thursday’s share price of ₦95.50.
It already owns 73.2 per cent of the bottler set up 57 years ago, and has the licence to bottle PepsiCo’s Pepsi and other products in Africa’s most populous nation.
The soft drinks bottling industry has been hit by slow demand arising from weak economic growth in Nigeria, which has just emerged from a recession and a currency crisis that stifled raw materials’ imports.
“As of now, we have received an offer from the majority shareholder of the company. It’s a financial restructuring,” Seven-Up Vice Chairman, Sunil Sawhney, told Reuters on phone.
He said the company has been making losses for some time and that the deal was aimed at restructuring the bottler, which distributes PepsiCo’s 7up, Pepsi and Mirinda branded drinks.
Shares in the soft drinks maker, which opened for trade at ₦92.50, rose 5 per cent on the news, valuing the company at ₦59.6 billion ($186.25 million).
The Seven-Up takeover deal comes six years after main rival, Coca-Cola, delisted its local bottling unit in a buy out deal worth $136 million, to expand the business and fend off competition.
Sawhney, who joined the company in a management change this year, said delisting Seven-Up from the stock exchange after the takeover would be “logical”. The takeover is subject to shareholder and regulatory approvals, he said.
Earlier, Seven-Up said its board has received an offer from Affelka to acquire all outstanding shares that it does not currently own.
Profits at Seven-Up started to decline in the first three months of 2015 just before Nigeria slipped into its first recession in a quarter of century triggered by low oil prices. The company then posted its first loss in half-year 2016 and since then losses have widened. It reported a ₦6.26 billion pretax loss in the first six months of 2017.
“Affelka will be injecting more capital into the business,” he said.